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What innovations and trendsare you seeing in transactionbanking?

Jan Kupfer This year is a momentous one for thedigitisation of payments. SWIFT’s globalpayments innovation (gpi), is already upand running – providing a secure andscalable cross-border payments solutionthat meets corporate demands in terms ofspeed and transparency. UniCreditlaunched a SWIFT gpi pilot with one of our

financial institution clients back in January –a project that has grown to the point where,today, we are processing thousands ofpayments a month. And with 110 othermajor banks currently part of the SWIFT gpiinitiative, momentum is set to continuebuilding.

Moreover, the introduction of instantpayments in Europe later this year will alsohave a profound impact. Banks andcorporates alike are hard at work preparingfor the switch, with many corporates –particularly in the B2C space – looking toadapt their operations to seize the new

Building the NewFinancial EcosystemCollaboration and client-driven solutions powering the digital revolution

The transaction bankinglandscape is transforming infront of our eyes. With the fieldawash with new technologicalcapabilities, Jan KupferandLuca Corsini, Global Co-Heads,Global Transaction Banking atUniCredit, discuss the latesttrends, their likely impacts, andhow the industry can drawtogether to maximise thebenefits for all.

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under way – and showing significantpromise. Proof-of-concept projects,particularly in the areas of payments anddocumentary trade finance, bode well forthe future, but in the short term, we willhave to wait for significant impact.

Progress towards wider adoption andscalability, for instance, will likely be slowedby regulatory and legal issues, but we seemainstream adoption as an inevitability inthe longer term. Achieving this will be amatter of promoting collaboration andconsensus on technical specifications andformats, and, while this poses aconsiderable challenge, we can take heartfrom the fact that the vast majority of tradefinance participants share a desire to moveaway from today’s slow and costly paper-based processes.

UniCredit, for its part, is actively involvedin the development process. Along with sixother European banks, we are currentlyworking on a blockchain-based initiativecalled Digital Trade Chain (DTC), aimed atdramatically improving access to tradefinance for European small- and medium-sized enterprises (SMEs). DTC willaccelerate the order-to-settlement process,reduce paperwork, and facilitatetransparent transactions from start to finish.The solution, designed to boost SMEs’ability to onboard new trade partnersthroughout Europe, could become the firstviable blockchain solution for trade financeto go live later this year.

Luca Corsini Indeed, as bank resources becomeincreasingly constricted, many banks arelooking both to new technologies, such asblockchain, and existing tools, such as theBank Payment Obligation, as highly efficient

ways to meet the more standardised needsof clients. It’s an undertaking that breedsbenefits in both directions. Banks improveefficiency and reduce the strain on humanresources, while corporates enjoy morestandardised, streamlined, and cost-effective solutions with improvedgeographical reach.

What role do fintechs have inthe development of solutions?Luca CorsiniWithout a doubt fintechs have anincreasingly important role to play, but it’snot necessarily the one many foresaw.While some transaction banks feared thatfintechs would challenge their dominance,this now seems unlikely – not least due tothe high level of product tailoring and riskappetite required for trade financeinnovation.

Instead, collaboration between banksand fintechs looks to be the most fruitfulapproach – combining the industry know-how, resources and client base of bankswith the innovation and agility of fintechs.Transaction banks are also proving useful asadvisors to corporates in this space – givingtheir expert opinions on areas of promiseand potential for specific collaborations.Certainly, client requests for information onthe burgeoning fintech landscape issomething we are experiencing more andmore at UniCredit.

How might bank-fintechpartnerships work in practice?Jan KupferWhen it comes to the question of howbanks and fintechs can join forces

opportunities posed by real-timefunctionality. Sectors such as e-Commerceare particularly well placed to benefit – withinstant receipt of payments meaning goodscan be prepared, dispatched and deliveredquicker than ever before. A prime exampleof this transformation phase is ourcollaboration with Alipay, the world’slargest online and mobile paymentplatform. Users can purchase goods andservices in Italy simply by using the app towhich they have grown accustomed. We arealso the first bank in Italy to offer Apple Payto its six million card-holder customers,making it possible to pay using Apple Pay inshops, through apps, and online.

UniCredit, again, is prepared for the shift.We recently started testing instant paymentswith RT1, EBA Clearing’s pan-European,real-time payment platform – a keymilestone as we prepare to roll out euroinstant payment products later this year.

Luca Corsini On the trade finance side, the shift fromtraditional documentary trade totransacting via open account is causingrelationships between buyers and suppliersto evolve – with supply chain financeprogrammes rising in popularity as a meansof supporting smaller businesses along thesupply chain in mitigating the risksassociated with open account trading.

It can be no coincidence that thispopularity spike comes alongside anincreasing corporate focus on integration,co-operation and alignment amongprocurement, sales and treasurydepartments – the key players in any tradefinance deal. Procurement, typically siloedwithin an organisation, is now much moreclosely aligned with the treasury in terms ofgoals and KPIs, and supply chain financeprogrammes are gaining favour for theircapacity to address the potentiallyconflicting priorities of each department.

What impact are newtechnologies such as blockchainhaving in the transactionbanking space?Jan KupferBlockchain-based solutions haven’t enteredthe mainstream yet, but experimentationand testing of various use cases are well

Without a doubt fintechs have an increasingly important role to play, but it’s not

necessarily the one many foresaw.

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productively, a number of differentmodels are now emerging. Firstly,transaction banks can acquire orfinancially support promising fintechs,and we are witnessing a growing numberof bank venture capital funds and growthaccelerators. UniCredit has movedquickly in this area, establishingUniCredit evo – a USD200m fund thatfocuses exclusively on identifying andinvesting in fintech companies. Moredirect partnerships are also provingpopular – whether the bank integrates afintech innovation into its existingoffering, or uses its industry expertise tosupport a fintech’s growth anddevelopment in the market.

Meanwhile, we are seeing a growingnumber of banks providing financingcapabilities to underpin fintech solutions,often connecting multiple businesseswith multiple banks and outsideinvestors.

Luca CorsiniBuilding on Jan’s point, bank-fintechcollaboration is enabling the bundling ofproducts such as supply chain finance,factoring, and securitisation on a single,web-based platform accessible tomultiple parties.

UniCredit has recently worked on justsuch a project – offering a comprehensivesupply chain finance platform to one ofour clients. The platform enabled them tocombine, or switch seamlessly between, arange of supplier financing solutions, withUniCredit able to offer advisory supporteven when bank financing solutionsweren’t needed. This combination ofbank expertise and funding workingalongside fintech IT capability to createclient-centric solutions looks to be themodel for the future.

How will banks’ corporateclients benefit from thesetrends?Jan KupferBanks are aware that corporate demandsin terms of quality, security and integrityhave never been higher – and theincoming generation of innovations aredevised specifically to address theseneeds. Corporates can look forward to

Luca Corsini

Global Co-Head of GlobalTransaction Banking, UniCredit

Luca has been Co-Head of GlobalTransaction Banking at UniCredit sinceAugust 2017. He joined the bank in 2016from Deutsche Bank, where he was Headof Trade Finance, EMEA from 2010, havingbeen responsible for trade finance in Italyfrom 2006. Prior to this, he held positionsin trade finance at ABN Amro andBarclays, as well as  Pirelli andSnamprogetti in Italy. 

Jan Kupfer

Global Co-Head of GlobalTransaction Banking, UniCredit

Jan has been Co-Head of GlobalTransaction Banking at UniCredit sinceSeptember 2016, moving from hisprevious position as Head of UnternehmerBank for UniCredit in Germany, RegionNorth. Prior to this posting, Jan held anumber of senior positions, includingHead of International ClientManagement, and later Head of CIBAmericas, for UniCredit in New York.

faster, more convenient and more robustservices from their banks – with trade andsupply chain finance, in particular, set fordrastic reductions in terms ofcumbersome documentation andunwieldy processes.

Luca CorsiniWhat’s more, these innovations promisebenefits for corporates of all sizes – givingthe lie to the old complaint that banks onlyinnovate for multinational clients. BothDTC and all-purpose supply chain financeplatforms bring greater choice andflexibility for banks’ smaller clients as well

as their larger counterparts, whilesimultaneously opening the door to morecompetitive pricing.

It’s also worth noting that suchsolutions automate processes not only forcorporates, but also for banks – meaningemployee time can be freed from rotetasks and re-allocated to more importantjobs such as client service. Combine thiswith the fact that automated client servicewill provide far faster and less-error pronesupport than has been previouslyavailable and corporates will find thattheir banks’ capacity to serve hasincreased immensely. �

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